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Shale deposits game changer for energy markets

Speaking to the London Chamber of Commerce on Tuesday, Union Gas CEO Steve Baker said natural gas from shale deposits has been a game-changer in the energy market.

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A breakdown of Baker’s presentation:

SHALE GAS

Since 2008, natural-gas prices have dropped sharply because of new technologies that allow natural gas to be extracted from shale deposits scattered across North America.

THE BIG BARGAIN

Baker said homeowners have been saving $275 to $400 a year as a result. Residential-gas consumption has also dropped about 33% in the last 20 years because of high-efficiency furnaces and appliances

Baker also said commercial/institutional users have been saving about $10,000 to $15,000 each year since 2008 while large industries are saving $10 million to $20 million a year.

“It continues to be the most affordable energy out there,” said Baker, a native of Chatham.

In contrast, Ontario’s industrial electricity rates are the highest compared to neighbouring provinces and states and residential electricity rates are second-highest.

THE BIG SHIFT

Alberta has been the traditional source of natural gas for Ontario. Production there has leveled off and much of the gas is used up in the oilsands project.

Western Canada gas is being replaced by huge new shale-gas deposits being developed in New York, Pennsylvania and Ohio.

Baker said some of that gas can enter Ontario through a pipeline in the Niagara peninsula, but there will be increasing pressure to construct a pipeline around the western end of Lake Erie to connect to a huge underground storage facility in Lambton County owned by Union Gas.

THE FUTURE

Baker said natural-gas prices might increase modestly in the coming years, but will be relatively stable with little volatility.

He said shale gas has made North America a powerhouse in natural gas, with the potential to attract industries such as fertilizer plants and refineries.

Natural-gas appliances and truck and bus fleets powered with the fuel will become more common, he predicted.

As for wind power, Baker said there were times last summer when wind farms were generating 1,200 megawatts of power but the output would drop to near zero in 15 minutes.